I think many of us can relate as customers and retailers to the significant upheaval in the world of retail. Jack Welch, ex chairman and CEO of General Electric once said, “Change before you have to.” Globally, there's been a lot of talk about big changes coming for the insurance industry.
What those changes will be differs depending on who you speak to and what you read. The general consensus, however, is that change is inevitable and as insurers, we must evolve and meet the changing needs of our customers.
We’re already seeing change happen in motor vehicle insurance, where automation and driverless vehicles are becoming a reality; and the sharing of assets, where users pay for what they use, is growing.
Just recently I was drawn into a conversation about this generation of young children and how they may never need to hold a drivers licence, let alone own their own motor vehicle. While this is hard to believe when most of us have grown up with motor vehicles, it may well become the norm.
Change may in fact not be years away, but just around the corner. Driverless trucks have already made their way across Europe and driverless taxi services have started up in Pittsburgh, Singapore and Dubai. Uber is very quickly becoming mainstream here in New Zealand and the momentum of electric vehicles is increasing, with large corporates like Air New Zealand leading the way with the rollout of their latest electric powered fleet. NZI is poising itself for change.
Across the entire Insurance Australia Group enterprise we’ve been putting together a programme of work to drive simplicity into our business by consolidating our systems and changing the way we work. We’re partnering with other organisations to drive our competitiveness and increase value where we can.
That being said, at the same time we must also respond to the challenges of today. Increased costs are happening across the board. This is largely influenced by strong demand and insufficient supply; the cost of building supplies and labour costs; increased compliance costs for building repairs following the new health and safety legislation (and in my view the true impact of health and safety hasn’t even hit us yet); changes in consumer behaviour and new emerging risks.
New risks certainly include methamphetamine contamination, but also shared models. Putting a home onto Airbnb, for example, is leading to questions regarding policy coverage. How technology is being owned and used is having an impact as well. The average household now owns multiple mobile phones, laptops and tablets.
The way these are being used outside of the home means increased frequency of loss and damage and that’s continuing to rise. I think this particularly applies to mobile devices where our policy coverage fundamentally hasn’t changed in years, yet everyday usage of these items is now the norm.
New business models, an increasing shared economy where people own less and share more and where the lines are blurring between what are commercial assets and what are personal are just some of the trends that I believe will drive change and the way we write policies in the future. Without change there can be no innovation, and without innovation is no progress
Travis Atkinson for NZI